WASHINGTON — An abrupt freeze on nearly all federal grants and loans announced Monday night by the Trump administration has created widespread confusion across the government, Congress, state programs and nonprofit organizations that rely on federal funding.
The Office of Management and Budget sent to all federal agencies Monday night directing them to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance.”
It’s not clear exactly which programs will be halted, but OMB also sent a separate document, asking federal agencies that provide financial assistance, for details on more than 2,600 programs, including:
- School meals for low-income students
- The WIC nutrition program for pregnant women and infants
- Wildfire preparedness for the Department of Interior
- The Medicare enrollment assistance program
- USAID foreign assistance
- Mine inspections
- A reintegration program for homeless veterans
OMB asked for the information to be submitted by Feb. 7.
The spreadsheet asks for information about the disbursement of funds, but it also has questions more specific to the Trump agenda, including:
- Does this program provide funding that is implicated by the directive to end discriminatory programs, including illegal DEI and “diversity, equity, inclusion, and accessibility” (DEIA) mandates, policies, programs, preferences, and activities, under whatever name they appear, or other directives in the same EO, including those related to “environmental justice” programs or “equity-related” grants?
- Does this program promote gender ideology?
- Does this program promote or support in any way abortion or other related activities identified in the Hyde Amendment?
Nonprofit organizations reached by NBC News said some of their funding appeared to have already been cut off, and they were scrambling to figure out what the implications could be for their programs, like those providing health care, housing and early childhood education.
Some early childhood education programs funded through Head Start said they were unable to access previously awarded funds that they needed to pay bills due on the first of the month because the system appeared to be offline, said Tommy Sheridan, deputy director of the National Head Start Association. He said he was told by several programs that they will have to shut their doors if the funding isn’t made available in the coming days.
“While we understand that this is an evolving story, this disruption, at best, will slow down Head Start agencies’ ability to pay hundreds of thousands of staff, contractors, and small businesses who support Head Start operations in every corner of the country,” Yasmina Vinci, executive director of the National Head Start Association, said. “At worst, this means that hundreds of thousands of families will not be able to depend on the critical services and likely will not be able to work.”
Local housing organizations were also unsure if they would have the funding available to help pay rents due Feb. 1 for thousands of low-income households in subsidized housing across the country, said Ann Oliva, CEO of the National Alliance to End Homelessness. Oliva said her organization has heard from several members that the system used to draw down funds to reimburse their housing expenses was unavailable on Tuesday morning.
“What we are hearing this morning is, honestly, a pretty good amount of panic by grantees,” Oliva said. “These programs exist in in red states and blue states alike, and there are vulnerable people that are going to be impacted in many, many communities and in every state across the country.”
If those funds aren’t made available in the next several days, organizations will be unable to pay rents to landlords and some tenants could face eviction.
In Illinois, state agencies have also reported issues accessing federal funding sites and disbursement systems, including Medicaid systems, which are used to manage and distribute previously authorized federal funds, said a senior aide to Illinois Gov. JB Pritzker.
A lawsuit was filed Tuesday against OMB in federal court in Washington, D.C. by the National Council of Nonprofits and the American Public Health Association, seeking a temporary restraining order to “maintain the status quo until the Court has an opportunity to more fully consider the illegality of OMB’s actions.”
The National Low Income Housing Coalition urged its members to call members of Congress to “push back against the Trump administration’s extreme order to withhold federal investments.”
The OMB memo sent out Monday evening said the funding review would be related to “activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”
“It’s super terribly written, and for that reason, it’s unclear exactly what it impacts, which is why you’re going to see absolute chaos today and the ensuing days, unless they further clarify it,” a former official in President Joe Biden’s administration said.
On Capitol Hill, lawmakers scrambled to figure out what the funding freeze would mean for their constituents.
“The scope of what you are ordering is breathtaking, unprecedented, and will have devastating consequences across the country,” the Democratic leaders of the House and the Senate appropriations committees — Rep. Rosa DeLauro, D-Conn., and Sen. Patty Murray, D-Wash. — wrote to OMB, going on to say that the pause is unconstitutional and unlawful.
At a news conference Tuesday morning, Murray said that the Senate Appropriations Committee had been trying to get in touch with the agencies to fully understand the impacts.
“This is a dagger at the heart of the average American family — in red states, in blue states, in cities, in suburbs, in rural areas. It is just outrageous,” Senate Minority Leader Chuck Schumer, D-N.Y., told reporters Tuesday morning.
A Republican operative noted that a broad effort to reorient the federal government’s mission has long been a goal of the party — but the fact that President Donald Trump was taking it all on at once was notable.
“Some of this stuff has only been talked about at cocktail parties at the Heritage Foundation in jest,” the operative said. “And they’re actually doing it all.”
In an interview at the House Republicans’ issues conference at Trump National Doral Miami, House Appropriations Chairman Tom Cole, R-Okla., defended Trump’s freeze on aid, arguing that it’s a way for Republicans to immediately stop spending they disagree with.
“I think they’re doing the right thing. They’re getting control of the situation,” he said. “There’s a lot of money moving out right at the end of the Biden administration. That’s, you know, pretty typical. So I think they want to get control of that and make sure nothing’s moving along that they don’t agree with. And they’re well within their prerogative to do that.”
It was unclear if the freeze would also affect funding for the 72 million people who receive health insurance through Medicaid, according to lawmakers and policy analysts. The federal government sends Medicaid funding directly to states, which then administer the program and pay doctors and hospitals for the care they provide.
“The memo is vague — Medicaid could be included,” said Brian Riedl, senior fellow at the Manhattan Institute who has worked on budget issues for Republican lawmakers. “But it’s more likely that OMB is focusing on competitive grants, loans, and contracts to private organizations, businesses, and perhaps local governments, rather than formula grants to states where the recipients are further removed from Washington controls.”
The memo said Social Security, Medicare and direct payments to individuals wouldn’t be included in the freeze.
Madi Biedermann, a spokesperson for the Department of Education, said federal Pell Grants and direct loans would not be affected, even though the program was listed in the spreadsheet.
“Per the OMB memo issued yesterday, the temporary pause does not impact ‘assistance received directly by individuals.’ As such, Title IV, HEA funds that are provided to individual students, such as Federal Pell Grants and Direct Loans, are not impacted by yesterday’s guidance,” Biedermann said.
Small businesses were also unclear on what the freeze would mean to loans administered by the Small Business Administration.
“We’re hearing from members who are concerned, and unsure how this could impact existing loans or loans already in the pipeline,” Todd McCracken, president of the National Small Businesses Association, said in a statement.
